Optimal Payments To Acquire California Based Meritus Payment Solutions To Accelerate Expansion In Us Payments Market

Acquisition of leading payment processing company substantially increases scale and drives multi-channel sales growth in rapidly expanding US ecommerce market

LONDON, MONTREAL and NEW YORK (July 1, 2014) -- Optimal Payments Plc (LSE AIM: OPAY, “Optimal Payments” or the “Group”), a leading global online payments and risk management provider, has entered into a definitive agreement to acquire all of the partnership interests of California based payment processing entity TK Global Partners LP (“Meritus”) (doing business as ‘Meritus Payment Solutions’) for consideration of $210 million consisting of $150 million in cash and $60 million of Optimal Payments shares (issued in equal tranches over four years commencing on the first anniversary of the closing date), subject to customary closing adjustments (the “Meritus Acquisition”).

Optimal Payments has also entered into a definitive agreement to acquire the trade and assets of Global Merchant Advisors, Inc. (“GMA”), a US based online payments company, for up to $15 million in cash, $10 million of which is payable on closing and the balance based on future performance of the business (the “GMA Acquisition”). Completion of the Meritus Acquisition and the GMA Acquisition (together, the “Acquisitions”) are conditional on one another and subject to customary closing conditions. Closing of the Acquisitions is expected to occur early in the third quarter of 2014. A further announcement will be made in due course to advise on completion.
Strategic highlights of the Acquisitions

• Acquisition of fast growing companies in key US market 
  • US merchant portfolio: adds over 8,000 US high growth small and medium businesses (“SMB”) in a broad range of vertical markets. 
  • US sales force: provides a successful, established and multi-channel US sales force.
  • US acquiring bank relationships: provides additional established US acquiring bank relationships with leading bank partners. 
  • Adds scale to NETBANX®: diversifies and broadens Optimal Payments’ NETBANX payment gateway and acquiring services business.
• Strong financial rationale
  • Acquisition of these profitable, fast growing and cash generative businesses is expected to enhance earnings.
  • Meritus financials (audited)
    • 2013: revenues $74.4 million, profit before tax $1.1 million, Net assets at 31 December 2013 $1.7 million, normalised EBITDA $13.0 million⁽¹⁾
    • 2012: revenues $38.3 million, profit before tax $0.7 million, normalised EBITDA $6.0 million
  • GMA financials (unaudited)
    • 2013: revenues $8.3 million, profit before tax $0.1 million, Net assets at 31 December 2013 $0.3 million, normalised EBITDA $4.6 million⁽¹⁾
• Major merchant concentration: expected to materially reduce concentration as a consequence of the Acquisitions. 
• Strategic fit: delivers synergistic corporate culture, values and entrepreneurial spirit.
• Brands: Optimal Payments will continue to operate the Meritus brand which has a strong presence and value in the key US market. 
• Financing: Bank of Montreal has committed to provide financing for the Acquisitions via multi-currency credit facilities of $150 million.

^{(1) Normalised EBITDA is after adjustments to remove management drawings and other costs that will not recur following the acquisition}

Joel Leonoff, President and Chief Executive Officer, Optimal Payments, commented:
“The US market represents the single greatest expansion opportunity for Optimal Payments. After careful evaluation of a number of potential candidates, Meritus stood out as the perfect choice on all fronts.  The company’s strong stakeholder relationships, multi-channel sales force, established presence with small and medium businesses in the US and entrepreneurial spirit makes them an ideal acquisition for us. I am very excited about the combination of our businesses which immediately accelerates the Group’s growth opportunities and accomplishes a stated key strategic goal for us in 2014.”
Alan Kleinman, Principal and Co-founder, Meritus Payment Solutions, added:
“Combining forces with Optimal Payments marks a significant step in realising our strategic goals. Optimal Payments offers our employees, merchants and business partners the experience, global infrastructure and product offering to achieve the scale required in today’s payments market. Our two organisations share the same enthusiasm and philosophy for future growth as we prepare to combine operations and leverage each other’s strengths.”